End-season sale help retailers clear inventory

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Apparel retailers are breathing a sigh of relief with their piled up inventories getting cleared due to positive end-of-season sale. In the last quarter of 2011-12, inventories are estimated to have fallen due to the end of season sales. Inventory is expected to be down by five to 10 per cent compared to the previous quarter, analysts say. Arvind Mills, Trent, Pentaloon, Alok and Shoppers Stop had declared higher inventory data with their half-yearly results.

The current financial year is expected to bring in better results for companies, who witnessed slump last year owing to excise duty, slow economy, and low demand. Now they will be able to start with lower inventories of finished goods. Retail sales too are expected to pick up in coming months by a marginal five per cent. According to Rahul Mehta, President, Clothing Manufacturers Association of India, “In the March quarter, retailers saw some relief, as they offered heavy discounts to get rid of their high inventory. I expect the next two months to be slightly better than last year.” The body says the industry has been sitting on inventory worth Rs 1,400 crores.

According to analysts, apparel sales have seen a decline in the last few quarters. The last (March) quarter may have helped companies to reduce some inventories, as they offered heavy discount. Many were forced on pre-poning their discount sale. Some offered discounts up to 70 per cent. Some brands, instead of offering 30 to 40 per cent of their inventory on sale, were forced to keep as much as 60 to 70 per cent of it on sale in the quarter.

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